Europe Passenger Car Sales: The EV Cool-Down Is Such a Twisted Story!

1 week, 5 days ago - 6 May 2024, autoevolution
Europe Passenger Car Sales: The EV Cool-Down Is Such a Twisted Story!
The European Automobile Manufacturers' Association (ACEA) publishes monthly European passenger car registration statistics. Starting from 2022, these statistics became more relevant because they take into account the major powertrain types. I challenge you to dive into the numbers and debunk the assertions that EV sales are on the verge of collapse.

First, we should acknowledge that registration numbers are different from sales numbers. Companies are normally more interested in how many cars they sell monthly or yearly because of the economic implications.

We all know that sales figures greatly impact Tesla's stock every quarter. It's almost the same for any other car company. However, registrations are the real deal regarding statistics because they show us how many cars are actually in use.

Most of the time, people don't just buy or lease an existing car from the dealership. Usually, there is a waiting list, especially for new and very promising cars, but mostly for electric cars. So, making statistics based solely on sales figures can lead to false conclusions regarding the actual state of the market.

For instance, customers tend to wait less for petrol or diesel cars or even for hybrids. In contrast, battery electric cars and plug-in hybrids take longer to be delivered, mainly because production facilities can't keep up the pace with the demand.

Of course, this might seem like nonsense in the first months of 2024, as the "EV market cooling down" scares everybody: carmakers complain sales are not on par with expectations, while the naysayers' anti-EV propaganda directly influences new customers. Consequently, the decision to buy an EV evaporates.

Add to the equation the harsh truth of governments slashing or eliminating EV incentives almost all over Europe. This is closely related to the fact that 2024 is a historical voting year and also to the very annoying political environment, which is under attack from Russia's hybrid war and China's economic ambitions.

Frankly, it was very easy for mass media and social media to create this environment of distrust in the transition to electromobility. However, while popular wisdom spreads this misinformation about "EV market doom," electric car expansion continues. Not enthusiastically, but showing strong progress.

The plug-in cars trend in the last two years is strikingly clear
Analysts usually need a benchmark to determine whether a month is good or bad for car sales. That's why they relate to the same month or period of the prior year. Of course, without context, conclusions risk being flawed. Any other information helps to carve a clear image of the market so that carmakers can adapt quickly.

Well, "quickly" is kind of slow in the car industry because of its sheer size and the many levels of authority needed to make decisions. By the way, the European auto industry employs almost 13 million workers (more than 5% of the EU's workforce) and generates over 7% of the EU's GDP. It can't be treated as a start-up…

Now, the latest numbers on European electric passenger cars are definitely not optimistic. This March, less than 200,000 EVs were registered in Europe, as opposed to more than 220,000 last March. This is an 11% drop, and it's clearly a warning signal.

The main reason is that sales increased by 29% and 10% in January and February, respectively. Between you and me, carmakers were expecting this negative trend because, mind you, most of the cars registered in the first quarter of 2024 were actually sold in the last months of 2023 when everybody knew that governments would diminish the support for electromobility in 2024.

However, you'd be surprised to find out that EV sales in the first three months of this year were 3.5 percent better than the same period in 2023. This is not much consolation for salespeople, but regular customers must understand the context. This way, they can understand that the "EV cooling down" is not a disaster.

How about looking at the registrations in all the months starting from 2022? And how about splitting the values into powertrain types? This way, we can see different trends, regardless of monthly variation in some particular periods - for instance, it's clear that in summer time or on winter holidays, one can't expect people to be interested in purchasing cars.

The "jigsaw" graph for battery electric cars shows large variations but is far from a pessimistic trend. Yes, there's a "hole" in January and February, but the same was true last year and the year before. Likewise, the end of 2022 marked a spike in registrations, mostly because of season rebates and stock discounts. A similar spike, although smaller, can be seen at the end of 2023.

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